Oil prices fell on Thursday as hopes of renewed peace talks between the United States and Iran eased fears of possible disruptions to global oil supplies. However, tensions in the Middle East continue to create uncertainty over oil production and shipments.
Because underlying inflation, which reflects price trends beyond temporary or volatile changes, remained relatively subdued, this is particularly important.
José Torres, senior economist at Interactive Brokers, said in a note late Wednesday that expensive crude oil remained the main factor pushing inflation above the target level. However, he added that broader price pressures had remained relatively contained, according to CNBC. Torres said inflation pressures concentrated in the energy sector supported a more patient approach from the US Federal Reserve .
The Wall Street Journal reported this, citing US officials and people familiar with the talks. Qatari mediators have also reportedly предложed a new plan to end the conflict involving Iran, the US and Israel. He also raised the possibility of speeding up a proposed seven-day peace plan if an agreement could be reached. This has kept hopes of a possible diplomatic breakthrough alive.
Brent crude futures fell 1.73% to $113.32 per barrel on Thursday. US West Texas Intermediate (WTI) crude futures also declined, dropping 2.06% to $100.66 per barrel, according to CNBC.
Oil prices fell after reports said US Vice President JD Vance had contacted Mohsen Rezaei, head of Iran’s Security Council , to restart peace talks. The plan aims to help the countries reach a peace deal, according to Reuters. Iran’s foreign minister said on social media platform X that Tehran remained open to diplomatic efforts.
Federal Reserve interest rate outlook
Torres said a geopolitical resolution could be close, potentially easing inflationary pressures. If tensions decline and oil prices fall, the Federal Reserve may face less pressure to raise interest rates further, according to CNBC.
